Tax Changes Coming for Seniors Over 65

Tom Watts/For the Daily Tribune
Robert Leslie, a certified public accountant for Carabell, Leslie and Co., 83 Macomb Place, in Mount Clemens, said the changes to Homestead Property Tax code will affect seniors in different ways.

Living day-to-day on a fixed income Muriel Cunningham is now bracing herself for a new tax law that could take away money she uses for monthly expenses.

Cunningham, a Clinton Township senior citizen, said she is concerned about new tax laws that will result in her missing out on a $1,200 Homestead Property Tax Credit for 2012.

“It’s been on the books for years and now it looks like I won’t get it,” said Cunningham, 78, who received a postcard in the mail titled: Notice of Changes to Homestead Property Tax for 2012.”

“The postcard got me in a tizzy,” she said. “Here it’s almost tax time are all of a sudden I find out about this.”

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Cunningham receives partial pension and Social Security from her late husband, so $1,200 is a lot of money on a fixed income.

“I am alone and my income is down and now it looks like I’m going to lose this credit, too,” she lamented. “How it is calculated; I am not sure, but it’s going to affect seniors 65 and older.”

Robert Leslie, a certified public accountant for Carabell, Leslie and Co. in Mount Clemens, said the changes to Homestead Property Tax code will affect seniors in different ways.

“What they (State of Michigan) did is revamp Michigan tax laws and one of them was the old Michigan Single Business Tax,” Leslie said. “What happens is they did away with the Michigan Single Business Tax for all individual taxpayers, except ‘C’ Corporations.”

“They kept it for ‘C’ Corporations,” Leslie continued. “ ‘C’ Corporations that pay federal income taxes that are not passed through to the shareholders. They passed some laws to dig up income in another fashion. They said, ‘under this new law we are going to reduce Michigan’s property tax credit for certain individuals who fall above the limit.’ ”

Leslie said many seniors 65 years old and up will see changes in their tax returns.

“Taxpayers who have property with taxable value over $135,000 would be the ones affected,” he said. “Taxable value is what is listed on the property tax bill. That’s the number they look at.”

What is also new this tax season, and explained on the postcard that Cunningham received, is taxpayers with total household resources, Leslie said.

“They call it ‘Total Household Resources’ and if those resources are over $50,000 then you will be affected,” Leslie said. “So if you are over 65 and your taxable value is under $135,000, and your total household resources are under $50,000, you will still be eligible for the credit but it may be reduced.”

“However, it does affect seniors who are over $50,000 in resources and if their taxable value on the homestead tax is over $135,000,” he continued. “If you are over, you will lose the credit.”

“My tax man said it’s true,” Cunningham said. “I am sure I’m not the only person who got this postcard.”